A business expense due to borrowing money is

A business expense due to borrowing money is

• A. Interest
• B. Rent
• C. Depreciation
• D. Taxes

Answer: (A)

Interest is the cost a business pays for using someone else’s money. When a company borrows funds, the lender charges interest, and that amount appears as interest expense on the income statement. This distinguishes it from other costs: rent is the price paid to use property, depreciation is a non-cash allocation of an asset’s cost over its useful life, and taxes are government charges. So the expense tied specifically to borrowing money is interest.

Interest is the cost a business pays for using someone else’s money. When a company borrows funds, the lender charges interest, and that amount appears as interest expense on the income statement. This distinguishes it from other costs: rent is the price paid to use property, depreciation is a non-cash allocation of an asset’s cost over its useful life, and taxes are government charges. So the expense tied specifically to borrowing money is interest.